I previously wrote about the restart of Red's Scarlet project, apparently to turn it into a still and video Digital SLR. The Scarlet, of course, was supposed to cost $3,000, and Red fanboys everywhere have been waiting breathlessly. Well, the first HD video from Canon's new 5D Mark II has shown up (thanks to our friends from Gizmodo), and it looks awfully good. The 5D can be had from Ritz, a reputable dealer, for under $2,700 without lens, or for about $3,500 with a lens. The video referenced by Gizmodo used 11 different lenses, so this was anything but a simple production. Nevertheless, pro photographers, the market targeted by Canon, buy lenses all the time, and still lenses cost a small fraction of the cost of video lenses. This is why Red made its move.
There's still plenty of market opportunity for Red, but as Jim Jannard said, the market has changed (dramatically), and the Scarlet, with its fixed lens and video-only orientation, simply wouldn't have cut it when it reached the market next year.